[secretasiandan]

Max Dama wrote this regarding using IB to do low latency trading while a student but had interned at a HFT shop

http://www.maxdama.com/?p=334

The short of it is no :

Indicating there are 255 – 112 = 143 (!!!) hops and 124 milliseconds of latency. Obviously retail traders have no chance with HFT strategies.

But places like Lime are accessible to sophisticated traders and offer colo services

http://limebrokerage.com/

[apaprocki]

Bloomberg also offers a comprehensive market data product that isn't just a firehose from the exchange. Lots of work went into normalizing the data stream so that consumers of the stream wouldn't have to learn the oddities of hundreds of different market feeds. The latency is actively monitored (in microseconds) and they offer direct co-lo as well.

http://www.bloomberg.com/enterprise/data_solutions/market_da...

I agree though, even if you have the best algo around, it could fall flat on its face unless you have the pockets to be side-by-side with the big shops.

These places are especially paranoid when it comes to co-lo. I've heard that exchanges guarantee that all the boxes are given the same exact length of network cable to remove any chance that shorter length favors one shop or another.

[veyron]

I agree with the final conclusion, but this is a terrible way to measure system latency!

For starters, most exchanges block icmp packets, precluding a ping-based measurement.

Latency should be measured by actually going through their systems. For example, after sending a FIX message to IB, it's not known how well their FIX processor performs (at the very least, they have to do risk checks, so its not just cut-through).

[secretasiandan]

I think the point is that if you're not co-located, network transit time from your servers to IB, not even including IB to exchange, is an insurmountable disadvantage.